Ruble Bonds Rise First Time in 7 Days as OFZ Auction Sells Out

By Vladimir Kuznetsov -
Feb 20, 2013

Russia’s ruble bonds due 2027
rallied for the first time in seven days after the Finance
Ministry sold all the notes offered at an auction today.

Yields on the OFZ bonds fell one basis point, or 0.01
percentage point, to 7.11 percent as of 7 p.m. in Moscow. The
ruble was little changed against the central bank’s target
basket of dollars and euros at 34.6590 and declined 0.1 percent
versus the dollar to 30.0950.

The Finance Ministry sold 30 billion rubles ($997 million)
of bonds due December 2019 at a 6.55 percent yield with bid to
cover ratio totaling 2.4 times. Yesterday it boosted the amount
of seven-year ruble securities on offer from 20 billion rubles
and canceled a 15-year bond offering.

“The results are really decent,” Alexander Ovchinnikov,
vice president at Sberbank CIB, said by phone from Moscow.
“There is interest in the central part of the curve. The
results will help us stabilize at the levels we’ve reached.”

Ruble-denominated government debt rallied in the second
half of 2012, lowering the yield on the 2027 notes by 225 basis
points from a 52-week high in June to a record low on Jan. 10 on
bets that easier foreign access would boost demand. The yield
rose in the second half of January and February.

Local players may have seized on the yield offered at
today’s auction “after the recent correction,” Alexey Demkin,
acting head of research at Gazprombank, said by phone.

About 230 billion rubles of OFZs have matured since Jan.
23, which may have stoked demand, Demkin said.

Crude oil, Russia’s major export driver, was down 0.1
percent in New York trading at $96.60 per barrel.